Thursday, July 25, 2013

Rising Number of Tourists in Bucharest - Might be Good for Business

The tour operator Neckermann Thomas Cook intends to promote Bucharest in several countries, including Germany, Britain and France as a destination for city break during the summer. Throughout this period the hotel rates are lower than the rest of the year, and tourists pay for a package under 350 euros (reported by Adevarul). Tens of thousands of tourists are expected in the following years.

We appreciate that this might have in the near future some very good effects on local businesses, including some rising interest in the local real estate market and rising profits for Romanian hotels and restaurants. This has happened to some other places in Eastern Europe, such as Prague, Krakow etc.

"The conjuncture is favorable right now. Prices of hotels are very low in summer, because it is low season. Bucharest has more business travelers, who come in summer, and hotels are empty. We must compare it with capitals in the area, Sofia , Prague, Budapest and Bucharest hotels rates are lower than 25-30% in summer, " said Mediafax, George Mărginean owner Karpaten Tourism representative in Romania of concern Neckermann Thomas Cook. Also, summer flies with small occupancy can get tickets at low prices. Also Mărginean said tourists coming to city breaks are aged up to 50 years and are willing to spend more money in the city than tourists circuits.

"Having greater flexibility for city break tourists use and other services to travelers to not use them in an organized manner, for example bus floor.

In addition, everyone will spend money in the historic center and buy souvenirs, "said Representative Neckermann. Price that you will have to pay a foreign tourist who comes for a city break in Bucharest, from Thursday to Sunday, will be included between 300 and 350 euros, and include air transportation, three nights' accommodation at the four star breakfast. first year, thousands of tourists Neckermann had a pilot project last year, which brought in Bucharest city break more than 600 tourists.

Mărginean estimated that with the start of the promotion, the company will bring in the first year thousands of tourists in the capital, their number will grow every year. "Neckermann was satisfied with the outcome of the pilot project and wants to promote on a much larger scale Bucharest. In addition to catalogs, aims to promote capital and outdoor and online in all countries where it has branches, including Germany, Belgium, Netherlands, France, UK, Austria, Switzerland, Poland, Czech Republic and Hungary, "he told Mărginean. He said that this promotion is to liaise with the Romanian state, claims news agency Tuesday. He said that foreigners are interested to come to Bucharest because it is a new destination and cheap.

In 2010-2012, for the creation and promotion of Romania's tourism brand have spent over £ 56 million (13 million), money from European funds. Creating and promoting tourism brand, financed from European funds are part of a project to promote tourism potential of Romania, which are allocated 75 million euros by the end of 2014. Tourism Karpaten annual service charge on the Romanian territory around 200,000 foreign tourists arrived on cruises, tours, trips to the mountains, the sea and the Delta. Thomas Cook, one of the largest travel groups in the world, started again in 2012 to bring foreign tourists in Romania through Neckermann brand, in 2006 after he retired Romanian market. The group last year brought over 5,500 tourists on the coast, and this year is estimated that number will exceed 7,200.

50% Tax for Artificial Transactions in Romania

Ordinance 8/2013 establish the terms and conditions in which the tax authorities are to determine, when establishing the amount of a tax or duty, which transactionmay be disregarded as one that has no economic purpose or can reclassify the form of a transaction so that it reflectsthe economic substance of that particular transaction.

Where transactions or series of transactions are classified as artificial, they will not be considered part of the scope of the avoidance of double taxation conventions. An artificial transaction isthe transaction or series of transactions that have no economic content that can‘tnormallybe used within ordinary business practices, their main purpose being to avoid taxation or to obtain tax advantagesthatotherwise could not be granted.
The new Ordinance 8/2013 emitted by the Romanian authorities lists and sets the new revenues that shall be considered as wholly obtained in Romania, whether they’re received in Romania or abroad. These are: earnings from services performed in Romania and outside Romania if the services are one of the following: management services, consultancy in any field, marketing, technical assistance, research and design in any field of advertising and publicity in any form in which they are made,  and the services provided by lawyers, engineers, architects, notaries, accountants, auditors;it isn’t taxable income in Romania international transport revenues and services that are accessories to that type of transport.

Ordinance 8/2013 regulates the measures regarding tax losses registered until the 30th of June 2013 by the permanent offices belonging to the same foreign entity, namely the recovery of losses depending on the period in which they were registered.

In terms of international tax issues, namely issues related to the income of a permanent office of a foreign legal person, Ordinance 8/2013 stipulates that in case the foreign legal entity operates in Romania through a permanent office, this permanent office is designated to fulfill the obligations of foreign legal person in Romania.

The ordinance also 8/2013 regulates the situation where the taxable profits of the foreign legal entity come from activities of multiple offices in Romania. Thus, starting from 1 July 2013, the foreign legal person that carries on its business through multiple permanent offices in Romania is required to establish one of these locations as designated permanent office for the fulfillment of its obligations. 

The permanent office set to accumulate the income and expenses of all the other offices belonging to the same foreign entity. It calculates declares and pays all the obligations under the income and expenses of all the other offices belonging to the same foreign entity.
Ordinance 8/2013 establishes a series of changes when it comes to withholding tax from income obtained from Romania, regardless if revenues are received in Romania or abroad.

The tax payable is thus calculated by applying a rate of 50% for incomes provided in art. 115 para. (1). a)-g), k) and l) - on dividends from a resident,interests from a resident , interests from a non-resident that has a permanent establishment in Romania if the interests is an expense of the permanent office/ the office permanently appointed, to  resident fees, royalties from a non-resident that has a permanent establishment in Romania, where the fee is an expense of the permanent office / permanent office appointed a resident fees, commissions from a resident who has a permanent establishment in Romania, where the commission is an expense of the permanent establishment / permanent establishment designated if revenues are paid into a state with which Romania has no  signed treaty under which to carry out the exchange of information. These provisions apply only when the kind of income of mentioned above is paid as a result of transactions classified as artificial as defined above, in this report legal.

Tuesday, July 23, 2013

British Investments in Romania

Enescu & Cuc Law Firm has been a member of the British Romanian Chamber of Commerce and has had in the past 10 years a growing number of British investors as clients. Romania still seems to attract lots of investors from the UK, according to the Romanian press (Mediafax). The British government hopes that the next four years exports to Romania will grow by 60% by creating a business center facility which will give British companies better access and exposure on the Romanian market.

The Romanian-British Business Centre was established by the British Embassy and the British-Romanian Chamber of Commerce. The project will give the British Embassy Bilateral Chamber of Commerce a grant of 200,000 euros.

"This is a step forward in the support we give economic relations between Romania and the UK. This is part of a project that includes 20 priority markets around the world. This provides support  to UK companies in markets like Mexico, Russia, India, Brazil and in Europe we selected two priority countries to support trade, namely Poland and Romania. Hopefully we will see a strong increase in both British investment in Romania and bilateral relations between the two countries, "said British Ambassador in Romania, Martin Harris.

He added that this measure also aims at facilitating access to British companies wishing to invest or have trade relations in Romania.

"The goal is to establish a British Romanian business center funded by a grant from the British Government for the British-Romanian Chamber of Commerce and through this we hope that by 2017 we see an increase of 60% of British exports in Romania " added Harris.

Tuesday, July 16, 2013

Opening a Logistics or Transportation Company in Romania

Opening a Logistics or Transportation Company in Romania could prove to be a very profitable idea since it seems that Romania is in the top 10 destinations for such a purpose. Indeed Enescu & Cuc Law Firm has lately received increasing requests from logistics companies looking to activate from Romania because of smaller activity costs and better taxation.

It must be taken into consideration that setting up a Romanian logistics or road transportation company does imply the requirement of obtaining a certain license. For your more information you can contact us; we will be happy to provide some in-depth information.

Romania is the only country in Central and Eastern Europe present a top ten of the most attractive destinations for logistics activities this year, dominated by Western European countries  (the figures were put together by Prologis, one the biggest companies activating in this field).

To achieve interviewed top storage users from different sectors, from retail, pharmaceuticals auto industry. They were asked to make a ranking of the 100 most important locations based on 13 criterias, the first being the most important access routes, proximity to customers, real estate costs, flexibility and availability of labor.

Bucharest and the Western part of Romania were placed in the 8th place among the most "desirable" destination for logistics activities this year and five in 2018, the best scores were obtained in terms of real estate costs and flexibility and availability workforce. As expected, the lowest score was found for Romania's infrastructure and availability of locations for the activity.

The top ten most attractive destinations for 2013 are also found in order, Venlo (Netherlands), Antwerp (Brussels), Rotterdam (Netherlands), Rhein-Ruhr (Germany), Madrid, Liege and central Germany, Ile de France and Dusseldorf.

The first remains Venlo (Netherlands), followed by Rotterdam, Antwerp and Rhein-Ruhr.

Romania managed to outperform markets like Frankfurt, Prague, Munich, Hamburg, Barcelona and West of England.

For additional information on how to expand to Romania or found your Romanian company please contact our Law Firm.

Tuesday, July 9, 2013

European and Offshore Company Formation

Enescu & Cuc Law Firm has numerous international partners (lawyers, accountants and consultants) out of which we mention one of the most prestigious company formation agents worldwide, BridgeWest, a company specialized in European and Offshore Company Formation. The Cyprus based company has been active in the international market since 2008 and is continuously expanding its jurisdictions, from countries such as Norway to Belgium or Netherlands.

We recommend any investor looking to expand to the European market or start an offshore company to visit one of BridgeWest's over 100 websites dedicated to company formation, translated in 5 languages.

BridgeWest is an International Consulting Company based in Cyprus created for international clients looking to expand to the European market. Our company has been created by people with important experience in assisting international clients in their business throughout the continent. They discovered that investors need quick information and assistance when it comes to setting up a new business abroad, selecting an accountant, collecting debt from a company located overseas or other related services.

BridgeWest is a cost-efficient alternative to multinational consulting companies. We believe that the international market needs decently-priced consulting services and we are able to deliver that by working with a network of verified local affiliates. This structure enables us to provide better servicing and pricing as well become a source of valuable information for investors worldwide.

For French clients looking to open offshore companies we recommend Création Société Offshore, a website in French dedicated to this subject.

Thursday, July 4, 2013

Rising Foreign Investment in Romania

With well-trained labor force and salaries with at least 50% below those in Western European countries, Romania ranks 10th in Europe and 4th in Central and Eastern Europe (CEE) as the number of jobs created as a result of foreign investment projects carried out in the country in 2012, according to a study by Ernst & Young.

"Romania last year attracted 7,114 jobs generated by foreign investment, 18.9% more than in 2011, according to Ernst & Young. The CEE region regained the attraction for foreign investment in 2012, two disappointing years. The region attracted 26.1% more jobs, surpassing Western Europe. Worldwide and European Companies are increasingly expanding production capacities in Central and Eastern Europe. Renault, for example, only produces a quarter of its cars in France, the rest being produced in Romania, Morocco, Slovenia and Turkey", says the company's annual report.

The authors state that both Romania and the region enjoys the advantage of capable and affordable human capital, making it competitive with Western Europe. According to the Organization for Economic Cooperation and Development, annual wages in CEE countries remain on average half of those in Germany, France and UK.

Although Romania is well-known to foreign investors for natural resources (oil, gas, energy) it often seems that the most important resource is still the human capital, the country's labor force. As an example Romania is Europe's preferred destination for international outsourcing companies because of the impressive number of foreign speaking persons (2nd only to the Netherlands).

Enescu & Cuc is a law firm oriented towards foreign investors in Romania. In order to register your Romanian company, you can contact us or visit our specialized website

Wednesday, July 3, 2013

Office Buildings in Bucharest

It seems that some larger real estate investors have an optimistic view on the future of office spaces in Bucharest, as a result of comparisons with other Central and Eastern European countries, such as Poland. Liviu Tudor, the largest office landlord Romania says that as an investor you have to be present in Romania after aftermath of the real estate crisis. He believes that in this field Romania has an impressive potential.

Liviu Tudor, owner of business parks Novo Park  in Pipera, and West Gate in Militari and projects with an aggregate leasable area of 150,000 square meters, says the skilled and competitive salary levels transform Romania into the main target of investment in the region.

"I think that the crisis must be the investor in Romania as there will be enormous building to do. I think Poland will become increasingly unattractive, while the gap between them and the West has decreased dramatically in comparison to other countries in Eastern Europe. Romania is the next country in size, which I think will follow a new trend of the need for office spaces," he told Mediafax.

Enescu & Cuc Law Firm is specialized in real estate law. We have assisted hundreds of foreign investors in Romania while purchasing and selling property in Romania, as well as renting office space in Bucharest.